The first resize line get's lost by the sub-process \(...\)
. Just remove the surrounding parenthesis in the first line, or move the source image into the same parenthesis.
convert source.png \
-gravity Center -resize 101x101^ -extent 101x101 \
\( +clone -threshold -1 -negate -fill white -draw "circle 50,50 50,0.0" \) \
-alpha off -compose copy_opacity -composite dest.png
or
convert \( source.png -gravity Center -resize 101x101^ -extent 101x101 \) \
\( +clone -threshold -1 -negate -fill white -draw "circle 50,50 50,0.0" \) \
-alpha off -compose copy_opacity -composite dest.png